By now, you've probably heard about TransCanada's Keystone XL pipeline. For even the most casual observer of the energy industry, this project has been the spark that has ignited political debates ranging from environmental hazards, emission of greenhouse gasses, and North American energy independence. In Tuesday's speech on climate change, President Obama made a point to discuss the pipeline:

Allowing the Keystone XL pipeline to be built requires a finding [from the Department of State] that doing so will be in our nation's interest.

There are clear environmental concerns that several people have regarding the construction of this pipeline, but the story is so much more than that. To help better understand the entire story of the Keystone XL pipeline, we at the Fool want to give investors a better look at what the Keystone XL means for all parties involved. In this part, we will take a look at what the Keystone XL means for Canadian oil producers, as well as some of Canada's other plans to export oil sands.

Risky businessIn some ways, Canada has much more at stake than the U.S. when it comes to the outcome of the Keystone XL pipeline. When oil sands are included, Canada has the world's third largest oil reserves, at 179 billion barrels. In terms of production, though, it's less than half of the United States. The primary market for oil sands, and all other Canadian oil exports, is the United States. Last quarter, Canada exported 2.69 million barrels per day of oil, and 2.6 million of that was transported to its southern neighbor.

Canada exports to the U.S. so much because of the geographic challenges that Canadian oil faces. The majority of it is found in Alberta and Saskatchewan, so oil to any other country would need to go over the Canadian Rockies or all the way to the Atlantic Coast. The only method for oil to reach the West Coast right now is via Kinder Morgan Energy Partners Trans Mountain pipeline, which provides 330,000 barrels per day of crude to the West Coast.

Therein lies the problem, the method for Canada to export its oil is by pipeline to the U.S., and the regions it can reach via pipeline have become saturated.

This has led to a steep dropoff in Canadian crude prices. Western Canadian Select, the benchmark pricing for Canadian heavy oil and oil sands, is currently at more than a $30 discount to comparable crudes.

While there are some other options such as rail, the most economically feasible method for oil sands to be exported is via pipeline to the Gulf of Mexico, where Canadian oil can compete with other heavy sources such as Venezuela, Mexico, and Saudi Arabia. Keystone XL could be a big help in alleviating that situation. This isn't the case for all Canadian crudes, though. Syncrude, a joint venture project among several oil-sands producers, is upgrading its oil sands to a light, sweet crude before it is shipped to the U.S., and it is commanding spot prices comparable to U.S. benchmarks such as West Texas Intermediate.

Who is affected?Keystone XL would be capable of moving any crude that wants a spot in the pipeline, but a majority of increased oil production from Canada in the foreseeable future will come from oil sands.

With little to no additional takeaway capacity coming online, though, several of those expansion projects have been shelved to prevent Western Canadian Select prices from dropping any further than they are today.

Some companies are more invested than others in Keystone XL, though. Both Canadian Natural Resources and Valero have committed to 550,000 barrels per day in shipments from the proposed pipeline. Others are hoping to grab a piece of some of Enbridge Energy Partners expansion of its mainline and lakehead system to get to the gulf as well.

If Keystone XL gets builtThe additional 830,000 barrels per day that can be delivered to the U.S. Gulf Coast would bring a sigh of relief for many producers in the region. Operational costs for oil sands have increased over the past year, and current prices make it extremely difficult to justify expansions. Problem is, though, that even if the pipeline gets built, we'll be looking at the same problem again in a couple of years. Also, the ability for the Gulf Coast to absorb Canadian heavy crude is limited to about 2.29 million barrels per day, so if Canada ever hopes to reach its goal of doubling production by 2035, it will need to find other markets to fill that void.

If Keystone XL gets rejectedThen Canadian oil is stuck with the same problems it has today. Kinder Morgan Energy Partners and Enbridge both have plans to expand takeaway capacity to the West Coast, but these two pipelines are facing political opposition very similar to what we are seeing here in the U.S. for Keystone XL. Also, TransCanada is in the process of converting one of its natural gas lines to the eastern provinces to get potential access to eastern Canadian refiners and Atlantic ports. There is a lot of money at stake for both Canadian producers and Canada itself. So eventually, it is very likely that one of these projects or something of a similar nature will be approved.

What a Fool believesCanada needs the U.S. for its oil exports, which certainly bodes well for the U.S. in terms of pricing for oil. Not only does this give us an enourmous pricing advnatage on Canada, but the construction of the Keystone pipeline would also put pressure on several other countries. Check back to Fool.com to find out who these countries are.

A special thanks to fellow Fool.com contributor Aimee Duffy for lending her expertise on the Canadian oil industry for this piece.